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Comment by venomsnake | Hacker News Reader

Because US is fully federalized and is redistributing from the top down (californians and newyorkers pay for the midwest).

The big federally funded programs (military, social security, healthcare, infrastructure) take some pressure off the state's budget.

And because US citizens have less state identity than they identify with US the wealth transfers are easier to bear.

The us citizens that will say "I am American from Colorado(or any of the other 49)" are more common than EU people that will say "I am European from Germany (or any of the other 20+ Eu countries)"

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The EU has union-level redistribution, especially for farmers, who, as in the US, are heavily subsidized.

US states sometimes get into the same kinds of problems. Look what's happening to Kansas right now, after a big tax cut. There's no escape for a state that screws up. They can't impose capital controls and keep people from moving their money out of state. They can't print money.

If the EU was a full financial union, individuals in Greece would have no problem withdrawing money from banks, because they'd be customers of banks in other countries. US states don't have their own financial systems. It's the combination of a common currency and separate banking systems that's the problem.

You can't really compare the redistribution in the States with the Euro area.

If some state like Kansas has problems, automatically, the federal budget cover the increment in social spending and that keep the aggregate demand in that state from going too low.

If some state like Greece has problems, automatically, Brussels make them to spend less in social programs in order to control its spending. The aggregate demand fall and the problems increase.

The Euro area is "designed" to be procyclical. And that is crazy.

Re: your first point, the same happens in Europe; the relatively rich west (like the aforementioned Netherlands) pays for the relatively poor newer eastern-european states, and the farming industry in countries like Spain, and with the recent problems in Greece, spends billions to try and get that country back on its feet.

" and the farming industry in countries like Spain,"

I don't know what this mean. The farmers in Spain are payed for not producing. I suppose the rational is protecting the farmers in France and the Netherlands. This is not redistribution in the sense of "rich" helping "poor".

The big difference is that a country in Europe has his own economy completely detached from the rest of the EU while in the US the federal state will provide money coverage for the basic state services and absorbs economic shocks distributing it on the whole country.

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